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RBOC Competition Sought

This year marks the 20th anniversary of the breakup of American Telephone & Telegraph Co., which rocketed long-distance service into a competitive business with ever-plummeting prices. In the local markets, however, dominant RBOCs retain the vast majority of subscribers, leading some policy-makers to push for a local version of the famed split-up.

In 1996, Congress tried to achieve with legislation the kind of competition in local telecommunications that U.S. District Judge Harold Greene achieved in the long-distance market with a court order 20 years ago. That vision has not come to pass.

Federal regulators are adjusting network access and pricing rules to further competition, but some state lawmakers see divestiture by the Regional Bell Operating Companies as the only way to achieve that end.

In Michigan, a pending bill would force the RBOCs to divest their network infrastructure, making the business of selling access to rivals separate from the business of offering services to retail customers.

Further reading

Speaking about the current local landscape, David Waymire, spokesman for the Michigan Competitive Telecommunications Providers Association, said: "It is the equivalent of having one company own all the roads and also some of the trucks. They can make it hard for other trucks to do business."

Since the passage of the 1996 Telecommunications Act, rival carriers have complained that the RBOCs use delay tactics and technological blocks to impede competitive progress. In Michigan, Waymire said, the incumbent carrier installs DSLs at new customer premises and runs other lines off of them. When a customer wants to switch providers, that carrier can take as long as six months to switch the DSL line, he said.

The RBOCs point to the success of the AT&T divestiture not as a model for their own operations but as cause for further deregulation. The many innovations that have resulted from competition demonstrate that the government should be less involved, the RBOCs said.

"Twenty years ago, consumers had one company, one service and one choice. Two decades later, a communications revolution has occurred," said Walter McCormick, president and CEO of the United States Telecom Association, a Washington-based lobby group.

"In the modern marketplace, it is time for a new communications policy that empowers consumers to determine market winners rather than regulators.